Rural Electrification

Rural electrification is the process of bringing electrical power to rural and remote areas.

Despite advances in overall global electrification rates, from 76% in 1990 to 85 % in 2012, and the huge efforts made by practitioners in the last years, universal access to clean electricity is still far from achieved as 1.1 billion people remain without access to electricity (SEforALL, 2015), while an additional 1 billion people lack access to advanced energy services. (UNF, 2016).

In 2012, 88 % of the people, who lacked electricity in rural areas lived in Sub-Saharan Africa and South East Asia. Especially rural areas in Sub-Saharan Africa are still struggling to gain access to electricity. From 2010 to 2012 net access to energy in rural areas in the region actually fell short by 23 million people (SEforALL, 2015). According to future projections made by the International Energy Agency (IEA), Africa will continue to struggle in providing energy access to rural populations and the number of energy poor in the region will continue to increase up to 645 million people in 2030 (IEA, 2011).

Approximately 87 % of the people without electricity live in rural areas characterised by remoteness and sparse population density, where the extension of national grids is often technically difficult, costly and inefficient. In contrast, decentralised elecricity generation and distribution through smaller and more local systems such as mini-grids and stand-alone systems are in most cases the more competitive solution. Their modular conception is easy to install and to use. Technologies can be used singular – only biomass, hydro power, solar and wind – or combined (hybrid). If energy storage systems are involved electricy use can be guaranteed 24 hours for each day of the week. (SEforALL, 2015)

Electricity Access Deficit and Distribution (Per 2012)

(Source: SEforALL 2015)

To achieve universal energy access in 2030, the International Energy Agency (IEA) estimates that 60% of the rural people without electricity gain energy access by using mini-grid or other off-grid decentralised solutions (IEA, 2011).

Both stand-alone and mini-grid systems offer the opportunity to not only consume electricity, but also to utilise it for productive uses such as irrigation, mining and refridgeration. With appropriate training, these systems can also be operated and maintained by local engineers and service providers, which in turn leads to local employment. Rural electrification with renewable energy sources is therefore sustainable from both an economic and an environmental perspective.

ARE members have shown in many cases how to develop and implement commercially viable renewable energy projects in many countries all over the world. However, the often immature rural electrification markets face many obstacles to grow in a self-sustainable way.

New investments in Clean Energy 2004-2014 ($BN) - (On and off-grid)

Note: Total values include estimates for undisclosed deals. Includes corporate and government R&D, and spending for digital energy and energy storage projects (not reported in quarterly statistics).

(Source: Climatescope 2014)

Key obstacles for massive clean rural electrification in emerging and developing countries that ARE is working to eliminate include:

Market barriers in developing countries. For example, many countries continue to subsidise fossil fuels as a way of reducing costs for consumers. In 2013, nearly $550 billion of public money was spent worldwide on these direct fossil fuel subsidies. This is money that could be shifted towards sustainable development in off-grid markets.

Lack of segmentation of rural electrification markets (Pico systems need soft loans and commercial debt/equity, while home systems and mini-grids need a blend of external subsidies and soft loans).

Financiers focusing on short term, rather than long term perspectives.

Need for more partnerships to allow local business development in developing and emerging countries.

Lack of coordination amongst donors, which would allow further streamlining of incentives and priorities.